Policing of investments will not benefit US: China Daily editorial

US President Donald Trump signed into law the Foreign Investment Risk Review Modernization Act on Monday, strengthening the authority of the Committee on Foreign Investment in the United States to police proposals of foreign investment on the grounds of national security.

It is widely perceived to be targeting China, since the Trump administration has repeatedly blocked Chinese investment in high-tech industry alleging Chinese investments are a threat and accused Beijing of “unfair” trade and intellectual property practices that cheat the system.

China has consistently denied the accusations and some US tech companies that have operations in China backed its avowals of innocence at a hearing organized by the US Trade Representative in late July, testifying that they had not been forced to transfer their technologies to their Chinese partners as the Trump administration has claimed.

National security is rightly the top concern of any country, but it is too often willfully used as a political tool by Washington, which has become alarmed at China’s growing economic strength and its bid to move Chinese industry up the value chain.

Foreign investment creates jobs and gives a boost to an economy. According to consulting and research firm Rhodium Group, for example, Chinese investment in the US created 140,000 new jobs in 2016.

The new act will only further disincentivize Chinese enterprises from investing in the US, their enthusiasm having already been dampened by the ongoing trade frictions.

In the first half of this year, acquisitions and green field investments by Chinese companies totaled only $1.8 billion, a drop of more than 90 percent compared with a year ago and the lowest level in seven years, according to Rhodium.

In essence, the Trump administration‘s bid to hinder China’s development is rooted in an ossified mentality that is unable to adapt to the relative decline of the US since its corporate excesses sparked the global financial crisis.

By restricting Chinese investment, the Trump administration claims to be protecting US interests and holding high the banner of discontent at the bottom of US society. But since it is one that puts the interests of shareholder America first, it has packaged it in a patriotic wrapper to sell it, as it does not address the fundamental problem in the US — the widening wealth gap and a society shaped like an asymmetrical hour glass with a nipped waist that denies hopes of upward mobility.

China is not the cause of the US’ woes, so the wall the Trump administration is constructing against Chinese imports and investments is not going to be the cure-all it has promised.